The ROI of Inclusive Cultures: Essential Belonging for DEI Programs

In the last few years, many businesses and organizations have been making an effort to promote diversity, equity, and inclusion (DEI). Several movements and events have sparked action in major corporations and small businesses alike. Although awareness of such issues has been abundant, there is still much more room for improvement. Many of us have heard of the terms diversity, equity, and inclusion, however, we tend to have a vague idea about the actual meanings and implications for the workplace.


Benefits of diversity in the workplace

The definition of diversity seems to be a bit hazy as it is a popular word and takes on many interpretations. However, diversity is generally defined as the distribution of differences in individuals in a group. Race, age, socioeconomic status, gender, religion, and ethnicity are all examples of diversity that we tend to think about. In short, diversity is synonymous with representation (Brimhall & Mor Barak, 2018; Sherbin & Rashid, 2017).


According to the U.S Bureau of Labor in 2019, the labor force was comprised of 18% Hispanics or Latinx, 17.4% foreign-born individuals, 13% Blacks, and 6% Asians. Additionally, around 57% of the labor force was made up of women. Research indicates that these barriers are superficial and diversity can bring many benefits to the workplace (Ahmed, 2019; O’Donovan, 2018).

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1. Diversity promotes innovation and creativity

When a diverse group of individuals comes together to brainstorm, they tend to produce more creative and inventive ideas. They are often less subject to Groupthink, and bring perspectives that may better represent those of a company's customers. This is due to the variety of knowledge and experiences all the individuals bring to the table. Having different perspectives can create new ideas or bridge the gap between pre-existing ideas. This aspect can be particularly helpful with problem-solving and decision-making and catching potential cognitive biases (Ahmed, 2019; O’Donovan, 2018; Hunt et al., 2015).


2. Inclusion increases job satisfaction 

We often bond with those who share similar worldviews, values, and experiences. It may seem contrary that teams of diverse people report higher job satisfaction, however, research has proven that diversity does elicit greater feelings of group enjoyment, positive feelings, and job satisfaction (Ahmed, 2019; Hunt et al., 2015; Van Dick et al., 2008; Paletz et al., 2004). However, this feeling of connectedness with one’s peers requires inclusion, an issue above and beyond diversity.

3. Diversity increases revenue

What's the ROI of diversity? Revenue increases in response to diversity initiatives are in part due to the heightened job satisfaction and innovation that diversity brings. A study conducted by Hunt and colleagues (2015), asked 366 companies to report employee demographics and annual revenue. Hunt and colleagues (2015)  found that teams with high ethnic diversity had a 35% likelihood of financially performing above the median. In simple terms, corporations with high diversity, ethnic or gender, tend to be more financially successful (Ahmed, 2019; Hunt et al., 2015). It's possible that those companies that successfully maintained high diversity through attracting and retaining talent had also developed inclusive cultures and hospitable work environments.

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So, is diversity the key to employee well-being and better revenue? Unfortunately, the answer is not a simple yes or no. Despite an overwhelming amount of evidence that diversity promotes job satisfaction, revenue, and innovation, there are still many issues with how diversity is being managed and promoted in the workforce. While most businesses and corporations have done a great job at promoting the idea of diversity and hiring an array of individuals, there is still an issue of inclusion. With inclusion, diversity can be maintained (otherwise, simply hiring more diverse candidates may still result in turnover). By creating an inclusive culture, where diversity is able to thrive, the culture, and bottom line, benefits as a whole.


By creating an inclusive culture, where diversity is able to thrive, the culture, and bottom line, benefits as a whole.

A lack of inclusivity and its repercussions

In the past, diversity and inclusion have been thought of as synonymous. However, their defining characteristics have become more concrete in recent years. Inclusion is the sense of belongingness, value, and acceptance in a group (Brimhall & Mor Barak, 2018; O’Donovan D, 2018; Sherbin & Rashid, 2017). Vernā Myers, an American activist, differentiated diversity and inclusion with the analogy, “Diversity is being invited to the party. Inclusion is being asked to dance.”

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“Diversity is being invited to the party. Inclusion is being asked to dance.”

What are the consequences of poor inclusivity? It goes beyond feeling like an outcast or a “bad-egg” at work. It often creates a “us versus them” mentality which can cause feelings of distrust amongst employees and supervisors. These feelings of distrust and frustration can lead to poor job performance and may cause an employee to seek out another job. (Corrington et al., 2020; Sherbin & Rashid, 2017).


1. Without inclusivity, authenticity is compromised

A report done by Sherbin and Rashid (2017) discovered the imperilment of employee authenticity in non-inclusive/low-inclusive workplaces. An average of 37% African Americans, 37% Hispanics/Latinx, and 45% Asian workers felt the need to change themselves to appear more attractive to the standards of their company. This change included both appearances (e.g. attire or hairstyle) and manners (e.g. appearing more “business-like”). While it is normal to have a “persona” for work, many marginalized individuals felt the overwhelming need to compromise their true identity to fit in at work. (Sherbin & Rashid, 2017).

2. Lack of inclusivity can inhibit career growth

Much like the previous point regarding authenticity, many marginalized workers feel limited in their career path. This is particularly prevalent in women who often still feel the societal pressure to be “homemakers.” In the same study by Sherbin and Rashid (2017), 45% of female-identified workers took time off to take care of children and 24% took time off to take care of an elderly family member. Whether or not the time off had been financially supported (e.g. maternity leave), 23% of women felt their career had been halted and reported general feelings of unsupportive and dissatisfaction. 

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3. Without inclusive leaders, employees may feel silenced

As outlined by Sherbin and Rashid (2017), an inclusive leader allows employees to voice their opinion and perspective, listens to and implements feedback, creates a safe and open space for employees to pitch ideas, and empowers employees. For leaders who have these attributes, 87% of their employees felt supported and connected and 87% felt comfortable voicing their opinions and ideas. For leaders who did not have any of the aforementioned attributes, only 51% of employees felt supported and 46% felt like they could freely voice their ideas (Sherbin & Rashid, 2017).


only 51% of employees felt supported and 46% felt like they could freely voice their ideas

While the promotion of diversity has been overwhelming and more than helpful, it is virtually fruitless without inclusion. When managed and applied properly, inclusion can foster greater job performance, job satisfaction, innovation, and career growth (Corrington et al., 2020; Brimhall & Mor Barak, 2018; Sherbin & Rashid, 2017). Without inclusion, however, the consequences can be quite significant. 


Equity and the wage gap

Equity is often confused with equality, and while their messages are similar, they are different concepts. Simply put, equality pushes for a state of being equal and equity promotes fairness. If you are familiar with the great equality of outcomes vs equality of opportunity debate, equality sides with more with equality of outcome, and equity aligns more with equality of opportunity (Kodelja, 2016) Both are necessary for a diverse and inclusive workplace. One such example of equity is the gender and racial wage gap. Many of us are familiar with this prevalent issue. Some of us may have even experienced it firsthand.



In the past few years, there has been a great push for closing the wage gap. In 2014, full-time female employees only 79% of their male co-workers earned (Blau & Kahn, 2017). The increased awareness and influx of women in the labor force have helped lessen the wage gap and promote equity in the workplace. However, experts believe it will take around 257 years to completely close the wage gap between genders (Gharehgozl & Atal, 2020).


The wage gap between genders has been recognized and several initiatives have been put in place to bring equity to the labor force. Unfortunately, the wage gap extends past gender and into the race and ethnic confines. A survey in 2016 found that black men earned an average of 70% of their white male counterparts and black women earned an average of 82% of white women earned (Daly et al., 2017). Similarly, the U.S Department of Labor reports that the average Hispanic/Latinx earns $0.73 for every dollar their white counterparts earn, and the average Native American/American Indian earns $0.77 for every dollar (gender was not specified).


While the onset of the pandemic has wreaked havoc on the economy, however, these equity issues have existed for decades. Not only does the wage gap add to the issue of inclusions and equity, it systematically puts these marginalized individuals at a disadvantage. This disparity can lead to individual and national problems such as generational poverty and economic decline (Daly et al., 2017).

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Promoting diversity, equity, and inclusion

Creating a diverse, equitable, and inclusive workplace requires change and effort from all sectors. From CEOs to entry-level employees, change and advocacy should be promoted. It can be difficult to know where to begin, so, here are some tips to get started.


1. Training: Try to understand the root of the problem

Most educational systems didn't teach diversity and inclusion, much less soft skills such as empathy. Training in these areas may seem like going backwards in time: but educating oneself and one's team is the responsibility of a leader. Consider diversity, equity, and inclusion like continuing education, and make it a priority for team members to understand that scientific basis behind things like cognitive biases and inter-group dynamics. While we can all read the statistics, without empathy and understandings, numbers are just numbers. This can help make biases, microaggressions, knowledge hiding, discrimination, or bullying top of mind. As discriminatory acts in the labor force tend to be subtle and may not appear to be outright prejudiced, many may not even be aware of their own attitudes without such training (Livingston, 2020).

2. Identify and acknowledge we all have biases

Albeit a difficult task, admitting one’s biases is an honorable and edifying task. The simple act of acknowledging when you are being partial (e.g. believing a racial stereotype) is an important step in becoming more inclusive and open-minded. When you stumble upon a bias, ask yourself, “what created this bias?” “What is feeding into this bias?” “What can I do to counteract this bias?” Leaders can continuously develop self-awareness.


3. Create a culture that promotes personal growth and responsibility

For change to occur and last, people need to be encouraged, not forced. Most of us do not like to feel threatened or to feel like our beliefs are being challenged. The most successful DEI programs are not forceful or promote conforming, rather they typically promote responsibility, growth, and autonomy. These programs provide the tools and resources necessary for a diverse, equitable, and inclusive workplace while still promoting autonomy (Kang & Kaplan, 2020). Think of it as the classic saying, “you can lead a horse to water, but you can’t make it drink.”

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The road to promoting DEI can be rocky and uncomfortable. It may seem impossible to promote these changes within the workplace and in your personal life. Thankfully, leadership development curriculum LIFE Intelligence is designed to make employee training simple, engaging, and informative. The 9-step program encompasses all aspects of self skills and leadership, from managing emotions to cognitive bias to conflict resolution. These can be essential for all employees, whether those experiencing insecurity or anxiety, or those trying to develop more empathy and unbiased judgement.

Used alone, LIFE can be a simple resource to develop as a leader and manager. Used in teams, entire groups can learn, as one user put it, "used in entire teams, everyone can gain the same knowledge and learn to treat one another with empathy and respect." 

Mason Low
February 13, 2021

References

Ahmed, M. (2019). Ethnic diversity in the workplace: The good, the bad, and the ugly. Aisthesis: Honors Student Journal, 10(1), 10-17.

Blau, F. D., & Kahn, L. M. (2017). The gender wage gap: Extent, trends, and explanations. Journal of Economic Literature, 55(3), 789-865. https://doi.org/10.1257/jel.20160995

Brimhall, K. C., & Mor Barak, M. E. (2018). The critical role of workplace inclusion in fostering innovation, job satisfaction, and quality of care in a diverse human service organization. Human Service Organizations: Management, Leadership & Governance, 42(5), 474-492. https://doi.org/10.1080/23303131.2018.1526151

Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Demographics, on the Internet https://www.bls.gov/cps/demographics.htm (visited February 10, 2021) 

Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Earnings Disparities by Race and Ethnicity, on the Internet at 

https://www.dol.gov/agencies/ofccp/about/data/earnings/race-and-ethnicity (visited February 10, 2021)

Corrington, A., Hebl, M., Stewart, D., Madera, J., Ng, L., & Williams, J. (2020). Diversity and inclusion of understudied populations: A call to practitioners and researchers. Consulting Psychology Journal: Practice and Research, 72(4), 303–323. https://doi.org/10.1037/cpb0000188

Daly, M., Hobijn, B., & Pedtke, J. H. (2017). Disappointing facts about the black-white wage gap. FRBSF Economic Letter, 26, 1-5.

Gharehgozli, O., & Atal, V. (2020). Revisiting the gender wage gap in the United States. Economic Analysis and Policy, 66, 207-216. https://doi.org/10.1016/j.eap.2020.04.008

Hunt, V., Layton, D., & Prince, S. (2015). Diversity matters. McKinsey & Company, 1(1), 15-29

Kang, S. K., & Kaplan, S. (2019). Working toward gender diversity and inclusion in medicine: myths and solutions. The Lancet, 393(10171), 579-586. https://doi.org/10.1016/S0140-6736(18)33138-6

Kodelja, Z. (2016). Equality of Opportunity and Equality of Outcome. Center for Educational Policy Studies Journal, 6(2), 9-24

Livingston, R. (2020). How to promote racial equity in the workplace. Harvard Business Review.

O’Donovan D. (2018) Diversity and Inclusion in the Workplace. In: Machado C., Davim J. (eds) Organizational Behaviour and Human Resource Management. Management and Industrial Engineering. Springer, Cham. https://doi.org/10.1007/978-3-319-66864-2_4

Paletz, S. B. F., Peng, K., Erez, M., & Maslach, C. (2004). Ethnic Composition and its Differential Impact on Group Processes in Diverse Teams. Small Group Research, 35(2), 128–157. https://doi.org/10.1177/1046496403258793

Sherbin, L., & Rashid, R. (2017). Diversity doesn’t stick without inclusion. Harvard Business Review, 1.


Van Dick, R., van Knippenberg, D., Hägele, S., Guillaume, Y. R. F., & Brodbeck, F. C. (2008). Group diversity and group identification: The moderating role of diversity beliefs. Human Relations, 61(10), 1463–1492. https://doi.org/10.1177/0018726708095711

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